SEC on High Alert for Lawyers Who Give “It Depends” Advice Regarding ICOs
U.S. SEC Chairman Jay Clayton in a speech last week put lawyers on notice that the SEC will be on “high alert” for lawyers who are giving “it depends” advice or misguiding their clients when it comes to ICOs. Chairman Clayton expressed that lawyers should be properly informing clients when ICOs are securities and subject to possible registration requirements and that lawyers have a professional obligation to flag any instances that do not follow the spirit of established securities laws.
See this intro from Lexology:
Securities and Exchange Commission Chairman Jay Clayton cautioned lawyers who may not be instructing clients that digital tokens issued as part of initial coin offerings are securities and subject to possible registration requirements, when the digital tokens are “likely” securities under applicable law standards. According to Mr. Clayton, such lawyers provide their clients “it depends” advice, when there is little doubt regarding the nature of the product offered during an ICO. In response, Mr. Clayton warned he has instructed SEC personnel “to be on high alert for approaches to ICOs that may be contrary to the spirit of our securities laws and the professional obligations of the U.S. securities bar.”
Mr. Clayton additionally noted that the SEC would be “looking closely” at public companies that change their name to reference the blockchain – such as to “Blockchain-R-Us” – when the company has no demonstrable track record of utilizing the blockchain for business purposes. Mr. Clayton indicated that the SEC would be looking at such companies’ public disclosures to see if such firms are complying with applicable securities laws.
Read the full Lexology article here: SEC Chairman Warns Lawyers Providing “It Depends” Advice on ICOs